Nasdaq-listed Zibao Technology disclosed that it has signed a non-binding term sheet with Joyertech and Information OPC to exchange stock for approximately 3,500 bitcoins in a PIPE funding round. Based on current prices, the deal is estimated to be worth approximately $220 million.
The company stated that if the transaction is completed, the buyer will nominate a majority of the board members, effectively gaining control of the company. The existing management will continue to be responsible for day-to-day operations, but primarily limited to the existing insurance business.
Transactions are paid directly in Bitcoin.
Unlike some listed companies that first raise funds and then buy Bitcoin on the market, this arrangement involves the buyer directly subscribing to shares with Bitcoin. In this way, once the transaction is completed, Zhibao Technology can add the Bitcoin to its balance sheet, creating a Bitcoin treasury.
The disclosure documents show that the transaction is still in its preliminary stages and no formal agreement has been signed. Further legal, financial, and operational due diligence must be completed, and relevant approvals from the company and regulators must be obtained, while also meeting Nasdaq listing requirements and other closing conditions.
Control may change
This transaction is more than just an asset allocation. According to the term sheet, the buyer will gain a majority of seats on the board upon closing, meaning control of the company could potentially change hands.
The company disclosed that the existing team is expected to continue managing the original business for some time until the company completes the spin-off, disposal, or other restructuring arrangements. In other words, the insurance business will continue to be maintained by the current team in the short term, but the scope for subsequent structural adjustments has been included in the transaction framework.
The stock price fluctuated significantly after the announcement.
Following the announcement, Zhibao Technology's stock price rose from $0.15 to $0.40 within hours before falling back to around $0.24, still significantly higher than its pre-announcement level.
In the past two years, an increasing number of listed companies have included Bitcoin in their balance sheets, attempting to reshape the capital market narrative. However, this model is not always sustainable. Some companies, after initially experiencing a boost in stock prices, have faced a decline in market enthusiasm and operational pressures.
Additional information:ZBAO Technology Co., Ltd. is headquartered in Shanghai and primarily sells digital insurance products in China. Its Nasdaq ticker is ZBAO.
